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What To Expect From Zscaler’s (ZS) Q2 Earnings

StockStory - Wed Feb 28, 1:01AM CST

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cloud security platform Zscaler (NASDAQ:ZS) will be reporting earnings tomorrow after market close. Here's what to look for.

Last quarter Zscaler reported revenues of $496.7 million, up 39.7% year on year, beating analyst revenue expectations by 4.9%. It was a very good quarter for the company, with a decent beat of analysts' revenue estimates and strong sales guidance for the next quarter.

Is Zscaler buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Zscaler's revenue to grow 30.8% year on year to $506.8 million, slowing down from the 51.7% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.58 per share.

Zscaler Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 4.8%.

Looking at Zscaler's peers in the cybersecurity segment, some of them have already reported Q2 earnings results, giving us a hint of what we can expect. Palo Alto Networks delivered top-line growth of 19.3% year on year, beating analyst estimates by 0.2% and Varonis reported revenues up 8.1% year on year, exceeding estimates by 1.6%. Palo Alto Networks traded down 13% on the results, and Varonis was up 2.7%.

Read our full analysis of Palo Alto Networks's results here and Varonis's results here.

Investors in the cybersecurity segment have had steady hands going into the earnings, with the stocks up on average 0.8% over the last month. Zscaler is up 0.8% during the same time, and is heading into the earnings with analyst price target of $254.2, compared to share price of $242.9.

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